Nationalizing 401(k)'s

Dutch2

I received an email from our President/CEO this afternoon wtih a comment that there has been some talk in the Obama Administration of Nationalizing 401(k)'s. I must admit to being caught flat-footed with this comment.
Anyone know anything about this? If it is for real, I am sure there will be some people that will want to move their funds out of this vehicle may go to self directed IRA's or such rather than go to a nationalized plan.

joannie

I wouldn't be surprised. It appears to me the next administration would like to nationalize everything. And, no, Frank, I will not explain or justify that statement. It is my own personal opinion.

NaeNae55

Last month Teresa Ghilarducci, a professor at the New School of Social Research, testified before a House subcommittee. She has a plan that eliminates 401k tax deductions, forces employees to contribute 5% (that gets a fixed 3% return) and in return employees would get $600 from the government every year. Employers would no longer contribute or get the associated tax breaks. I believe the plan calls for current 401k's to be rolled over into these new plans called GRA's.

I think it is a little early to worry about this. One person testifying before a subcommittee is a long way from nationalizing 401k's. Still, it is good to be informed and on the look out.

Good luck!

Nae

FunHRBanker

That sounds terrible! Not everyone can afford to contribute 5% and still feed their family, make rent/mortgage payments, etc. Fixed 3% return? That's crap too (ok, it's better than the nosedive my 401k has taken, but when the market is good...).

Dutch2

Nae:
I believe that is exactly the report he was referring to. I think this discussion may also include IRA accounts so moving the money to an IRA would probably not be a solution if any of this ever comes about. As far as the talk about a "nationalized" retirement system, Congress continually has different "experts" testify on Capitol Hill regarding different options for various things. This one expert discussed this concept and the media has just taken this and ran with it. Even this "expert" indicated that if she had testified a year ago, her ideas would have had not traction, but given the recent market, she has gotten a lot of attention.
To soon to worry much about it at this point. I hope...

Peggy UH in LA

It's another example of government intrusion into our lives, which seems to be increasing. Now Nancy Pelosi has a plan to tax our 401K plans now, a one-time tax, they call it. It's still double taxation since we will be taxed on the income again when disbursed. We need to protest NOW to our Congressmen/women before it gains more momentum.

NaeNae55

Where did you get your information from? All I could find on this was from 2006 and 2007; it was referred to as a one time windfall tax. According to snopes.com, the information is false.

Do you have something more recent?

ACU Frank

Thank you Nae.

Nevada HR

Hmmm...check out this article....

[url]http://www.workforce.com/section/00/article/25/83/58.php[/url]

NaeNae55

See post #2 Nevada. It is unlikely 401(k)s will be abolished, but Teresa Ghilarducci did testify that she believed that is what we should do. That is not the same thing as Pelosi wanting a one time tax, which is what I was questioning in my last post on this thread.


Nae

Nevada HR

Oops!

Peggy UH in LA

Obviously, i don't come here often, way too much to do. Sorry, i should have said Pelosi's Congress is interested in changing the 401K system - and as i understand it, eliminating the tax breaks on 401K's. I will ask the person who told me for any additional specifics. Here is one article I found - [url]http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081007/REG/810079894[/url]

NaeNae55

Yes, this article is similar to the one I referred to in post #2. Though written today (Dec 31) it is talking about the same committee meeting (where Teresa Ghilarducci testified) which took place a month or two ago. At this point it is just talk (similar to other B.S talk you hear in Congress). I am alert, but not concerned.


Nae

ACU Frank

In Bush's quest for "silver linings" to his legacy, he will probably refer to the net result as The Bush 401k Tax Cut... Since your 401k is worth less than it was a year ago, your tax will be lower!